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From bitcoin scams to space law, this edition of Risk Wrap highlights six developments shaping compliance, governance, and insurance exposure across high-risk industries.
Crypto ATMs Face Growing Legal Pressure as Fraud Losses Climb
The Massachusetts Attorney General has filed a lawsuit against crypto ATM operator Bitcoin Depot, alleging the company knowingly enabled widespread scams through its machines. This is the most recent in a series of similar cases against crypto ATMs in the US.
The state claims Bitcoin Depot used misleading sales practices and charged excessive fees, facilitating fraudulent transactions that cost residents over $10 million. In fact, more than 50% of the money that passed through their Massachusetts kiosks from August 2023 and January 2025 is said to be scam related.
The complaint alleges that the company was aware of this activity and kept between 15-50% of the fees itself. It also claims that in 2021, members of their due diligence team discovered that 90% of customers they interacted with were scam victims and warned an executive that their kiosks were enabling money laundering at an “extreme volume”. Later, the company’s compliance measure was made “less effective”, which paved the way for more fraudulent activity.
Fraud involving crypto ATMs has surged nationally. The FBI received almost 11,000 fraud complaints about them in 2024 alone, a 99% increase on the previous year. The total alleged losses across these claims were $247 million. Between January and November 2025, total alleged losses reached $333 million.
Implications for brokers and their clients:
- Investigate directors’ and officers’ insurance to protect executives against lawsuits alleging failure in oversight, compliance, or fraud prevention.
- Crypto companies may consider obtaining comprehensive digital asset crime insurance to mitigate exposure from fraudulent transactions facilitated through their systems.
- With increasing enforcement actions, consider policies that address regulatory liability and include coverage for investigations, fines, and compliance failures tied to AML/KYC breakdowns.
Source: International Consortium of Investigative Journalists (February 26, 2026). Massachusetts sues Bitcoin Depot, alleging the crypto ATM operator knowingly facilitated crypto scams.
Lines of business mentioned: D&O Insurance, Digital Asset Crime Insurance.
AI Litigation Shifts Toward Product Liability as Courts Test Responsibility Across the Value Chain
Legal experts suggest the tides are turning in AI litigation. Earlier in AI’s history, lawsuits were often based on consumer protection, privacy, defamation, and IP infringement, but experts predict that product liability will be the main lens through which AI law develops going forward.
Product liability is designed to assess mass-distributed technologies in terms of defects, warnings, and foreseeability, and liability can span across the chain of entities involved in bringing a product to market.
An emerging issue in disputes is whether generative AI outputs are considered to be “expressive content” or the result of product design. Defendants often opt for the latter, labelling claims as attempts to impose liability for speech, while plaintiffs increasingly targeting the system’s architecture, considering aspects like safety warnings, escalation pathways, defaults, guardrails, marketing, and negligence in testing and monitoring.
Policy developments are leaning towards the products doctrine, focusing on defining the product, the entities within the distribution chain, and how responsibility is allocated if the software causes harm.
It’s suggested that courts continue testing the product versus service line, and the EU’s Product Liability Directive and state statutes will likely feature in complaints and expert reports more often.
Implications for brokers and their clients:
- Investigate product liability insurance that explicitly addresses harms arising from AI systems.
- Consider technology errors and omissions insurance that extends to model training, deployment, third-party integrations, and post-release monitoring failures.
- Investigate tailored AI insurance by specialist providers whose policies are informed by current regulation and exposures.
Source: National Law Review (March 27, 2026). AI Product Liability: The Next Wave of Litigation.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Orbital Power Generation and Data Infrastructure Are Outpacing Existing Space Law
The renewed push for space-based solar power and orbital data centers is exposing major gaps in how liability is defined and enforced in space activities. In January 2026, SpaceX filed with the Federal Communications Commission for permission to deploy up to one million satellites referred to as “orbital data centers” in non-geostationary orbit. Other examples include Google’s Project Suncatcher and Starcloud’s proposed 88,000-satellite constellation.
As activity reaches such scales, the risks grow significantly. Existing legal frameworks were built for limited, state-led missions and aren’t equipped to address the current reality. They focus on physical space objects but largely ignore liability tied to data, cybersecurity, and cross-border digital infrastructure, which are now central concerns for orbital operations. In addition, there’s no binding system to manage orbital congestion or prioritize competing uses, further complicating how responsibility would be assigned in disputes.
As a result, liability is likely to be shaped less by treaties and more by national regulation, licensing conditions, and contractual arrangements. Legal experts suggest that operators watch out for rules surrounding:
- Risk-based access: Regulators and industry groups may start requiring financial guarantees tied to collision and debris risk.
- Increased transparency: Large constellations may have to share real-time position and maneuver data, potentially under multinational coordination.
- Safety rules for power beaming: If space-based solar power and data centers materialize, nations will need agreed upon standards to protect aviation and manage transmission safety.
- Expanded licensing conditions: Space licenses may increasingly include obligations related to cybersecurity and data governance.
Implications for brokers and their clients:
- Consider bespoke space insurance policies tailored to novel mission profiles.
- Investigate business interruption coverage for service outages that addresses revenue loss and contractual penalties.
- Investigate space insurance policies that address breaches, data loss, and regulatory exposure tied to cross-border data processing and AI systems hosted in orbit.
Source: POWER Magazine (March 26, 2026). Solar Power Satellites and Orbital Data Centers—International Space Law Implications.
Emerging insurance industries mentioned: Space Economy Insurance.
Momentum Builds for Federal AI Oversight in the US
On March 20, 2026, the Trump administration released a non-binding National Policy Framework for Artificial Intelligence outlining federal priorities for AI regulation. This followed closely after Senator Marsha Blackburn introduced the TRUMP AMERICA AI Act, a 291-page draft bill, indicating growing momentum toward comprehensive federal AI oversight.
The Framework is built around seven pillars, emphasizing the protection of vulnerable groups, intellectual property, free speech, and innovation, while favoring federal preemption over a patchwork of state laws. It avoids proposing new regulators and instead suggests relying on existing agencies.
Key measures include stronger safeguards for children (like parental controls, age verification, and limits on data use), protections against government-driven coercion around moderation based on ideological agendas, and mechanisms for individuals to challenge perceived censorship. It also highlights enforcement against AI-enabled fraud, explores collective licensing for IP use, and proposes protections against unauthorized digital replicas of individuals.
A central theme is establishing a unified federal approach, limiting burdensome state AI laws while preserving state authority over general enforcement areas like fraud, consumer protection, and zoning. The Framework also argues that AI development should remain largely federally governed given its interstate and national security implications, and that states shouldn’t penalize developers for third-party unlawful conduct involving their models.
Implications for brokers and their clients:
- Consider media errors and emissions insurance covering claims tied to AI-generated content, copyright disputes, and alleged censorship or defamation.
- With rising concern over AI-enabled fraud, consider cyber liability insurance that includes protection against social engineering, impersonation, and third-party misuse of AI systems.
- Consider tailored directors’ soand officers’ insurance to protect leadership against investigations, enforcement actions, and governance-related claims as federal oversight expands.
Source: Latham & Watkins (March 26, 2026). Trump Administration Takes Major Steps Toward Comprehensive Federal AI Regulation.
Lines of business mentioned: Media Errors and Emissions Insurance, Cyber Liability Insurance, Directors and Officers Liability Insurance.
Switzerland Positions Itself as a Space Hub with New Regulatory Framework
Switzerland has drafted its first national regulatory framework for space activity, known as the Federal Space Operations Act. Key elements of the proposed legislation include:
- Space operations licensing: The draft law would require operators to obtain authorization for the launch, positioning, control, and monitoring of space objects.
- Liability framework: It proposes strict liability for damage caused on Earth or to aircraft, alongside fault-based liability for damage involving other space objects or onboard persons and property.
- National registry for space objects: Space assets would need to be recorded in a Swiss register, with Swiss law applying to them.
- Positioning Switzerland as a sustainable space hub: The legislation seeks to increase Switzerland’s appeal for space operators while encouraging the sustainable, and peaceful use of space.
Implications for brokers and their clients:
- Investigate specialized space insurance to address risks from launch failure through to in-orbit malfunction, aligned with licensing requirements under the proposed regime.
- Given the dual liability framework, consider obtaining robust third-party liability insurance covering damage on Earth, to aircraft, and to other space assets or onboard parties.
- Consider D&O insurance to protect against governance failures tied to Switzerland’s evolving space laws.
Source: Niederer Kraft Frey (March 6, 2026). Switzerland Moves to Regulate Space Operations — A New Legal Orbit for the Swiss Space Industry.
Emerging insurance industries mentioned: Space Economy Insurance.
Agentic AI in Payments Accelerates Despite Regulatory Concerns
Findings from law firm TLT’s Retail Agility Report, based on a survey of the UK’s 100 most prominent retailers, show that 49% of respondents are investing heavily in agentic AI, yet only 15% feel their existing payment contracts are equipped to handle transactions carried out by AI systems. Initial use cases include real-time pricing adjustments and AI-led decisions on payment methods.
70% of retailers consider changing regulation to be a key obstacle. Areas of concern include upcoming rules on buy now pay later, guidance around AI-driven transactions, and compliance requirements under the Data Use and Access Act, which will support the UK’s Open Finance regime. Fraud prevention is also becoming more complex, with 29% of retailers planning to implement AI-driven tools to differentiate genuine automated transactions from malicious activity.
Implications for brokers and their clients:
- Consider AI-specific errors and omissions coverage, as traditional tech E&O policies may not fully address losses caused by autonomous decision-making.
- Review whether existing cyber and crime insurance policies include AI-driven transaction risks.
- Assess the need for regulatory investigation and fines coverage in light of evolving UK rules around AI, payments, and Open Finance.
Lines of business mentioned: Tech E&O Insurance, Cyber Liability Insurance.
Source: The Fintech Times (December 19, 2025). UK Retailers Race to Adopt Agentic AI for Payments Despite Infrastructure and Liability Gaps.
